United Tech to buy Goodrich for $16.5 billion

United Technologies Corp (UTX.N) has reached a $16.5 billion cash deal to acquire aircraft components maker Goodrich Corp (GR.N), in what would be the diversified U.S. manufacturer's biggest deal in a decade.

United Tech said on Wednesday it would pay $127.50 a share for Goodrich, a 47 percent premium over the stock's closing price last Thursday. It also includes $1.9 billion in assumed debt.

The deal comes as blue-chip United Tech looks to cash in on the upswing in plane orders and production as declining global spending on defense pressures its military business.

The acquisition can help it build critical mass in new aircraft technology and plane services as civil demand rebounds.

Goodrich is poised to grow as key commercial plane programs such as the Boeing 787 Dreamliner and upcoming Airbus A320neo ramp up production.

"It's a good deal," said Virginia-based defense consultant Jim McAleese.

"This is definitely a step forward in the growth of United Technologies in commercial aerospace, and it reduces the company's exposure to defense," he said.

BUCKS M&A SLOWDOWN

The deal comes despite a broad slowdown in merger activity globally, as market volatility and economic uncertainty give many firms a pause.

But it shows large, well-capitalized companies are still willing to take on strategic transactions and financing remains available for companies with good credit.

Within the sector, the deal could also be a harbinger of more M&A as companies look to reduce their dependence on defense amid declining global spending.

Goodrich supplies parts for Hartford, Connecticut-based United Tech's Pratt & Whitney jet engines and Hamilton Sundstrand's aircraft electronics.

The deal is a big move for United Tech Chief Executive Louis Chenevert, who had long said he was interested in doing more deals but was having a hard time coming to terms with targets on price.

"Goodrich delivers on all of our acquisition criteria. It is strategic to our core, has great technology and people, and strengthens our position in growth markets," said Chenevert, who ran the Pratt & Whitney unit before taking on the top job.

The deal is United Tech's largest since its year 2000 showdown with General Electric Co (GE.N) over Honeywell International Inc (HON.N). United Tech made a $36 billion offer for Honeywell, which GE topped. European regulators ultimately scuttled that deal.

Goodrich CEO Marshall Larsen, a 34-year Goodrich veteran, will run the new UTC Aerospace Systems unit, which will be based in Goodrich's current home town of Charlotte, North Carolina.

United Tech plans to sell $4.2 billion in stock and suspend share repurchases through next year to maintain its credit rating, according to the Wall Street Journal, which said JPMorgan Chase (JPM.N) is leading a $15 billion loan package for the deal, with HSBC Holdings (HSBA.L) and Bank of America Corp (BAC.N) also involved in the financing.

United Tech shares have risen some 8 percent over the past year, outpacing the 6 percent rise of the Dow Jones industrial average .DJI. Goodrich is up 52 percent, with more than half of that run coming over the past week.

JPMorgan Chase & Co and Goldman Sachs & Co (GS.N) advised United Tech on the deal, while Credit Suisse (CSGN.VX) and Citigroup (C.N) advised Goodrich.

(Reporting by Scott Malone in Boston, Paritosh Bansal in New York and Andrea Shalal-Esa in Washington;

After 3 years, Boeing Dreamliner becomes reality

 Boeing's long-awaited dream machine became a commercial reality on Sunday when the lightweight plastic-composites 787 Dreamliner was formally delivered to its first Japanese customer.

Boeing says the revolutionary carbon fiber design will hand 20 percent fuel savings to airlines struggling to avoid a new recession, and give passengers a more comfortable ride with better cabin air and large electronically dimmable windows.

The first $200 million aircraft was handed over to Japanese carrier All Nippon Airways three years behind schedule after persistent delays that cost Boeing billions of dollars.

"It took a lot of hard work to get to this day," said Scott Fancher, vice president and general manager of the 787 program, at the outset of two days of celebrations at the plane's Seattle production plant.

The blue and white-painted long-range aircraft, which boasts a graceful new design with raked wingtips, will leave for Japan on Tuesday and enter service domestically on October 26.

Boeing has taken orders for 821 Dreamliners, which will compete with the future Airbus A350, due in 2013.

The much-anticipated handover came a week after another major first delivery -- the 747-8 Freighter -- was abruptly postponed in a contract dispute with the customer. ANA, the world's ninth largest airline by revenues, plans to coax the airplane into service on domestic routes before putting it on longer international routes like Frankfurt, Germany.

The aircraft goes 52 percent further than the all-metal Boeing 767 which it is designed to replace while using 20 percent less fuel for the distance flown, an ANA executive said.

In a classic roll of the dice in the high-stakes aerospace industry, Boeing abandoned plans for a sound barrier-chasing "Sonic Cruiser" a decade ago and worked on lighter long-range jets as cash-starved airlines valued efficiency over speed.

The resulting composites-based technology proved popular with airlines, forcing Airbus to turn its back on the aluminum airframe for its next generation of jets. Boeing expects this to become the standard for future passenger planes.

"Technology will only get more efficient and lighter," said the 787 program's chief project engineer Mike Sinnett.

BUYER CONFIDENT ON RAMP-UP

The plane's lighter weight allows airlines to operate routes even when the demand is insufficient for larger aircraft like the Boeing 777 or 747, or the Airbus 380 superjumbo.

"For aviation we believe this is as important as the 707 was with the introduction of the jet age," Fancher said.

He moved to head off any fears over the new materials, stressing tough composites were nothing like ordinary plastic.

"Plastic is what you have on the dashboard of your car. This is not plastic," he told reporters.

The 787 development program has been delayed seven times due to challenges with engineering, supply chain glitches and a 58-day labor strike in 2008. [ID:nS1E78O09V]

"We have been waiting for the 787 for over 3 years as we expected it in the summer of 2008," said senior vice president Satoru Fujiki who took part in negotiations to buy the 787.

"I can't say the delayed delivery didn't have any impact but ANA and Boeing worked closely to mitigate it," he said, adding Boeing had provided alternative jets to meet the shortfall.

ANA has ordered a total of 55 Dreamliners worth $11 billion at current list prices, including 40 of the 260-passenger 787-8 variant being delivered this week. #

ANA plans to take delivery of 4 planes in 2011 and an additional 8 next year. "By the end of 2017 we will get all our 787's so it is catching up on all our deliveries."

The Seattle Times reported on Sunday that 787 program costs had topped $32 billion due to delays. That estimate raised questions, the newspaper said, over whether the new jet would make money for Boeing before "well into the 2020s, if ever."

Boeing declined comment.

Analysts say new jets typically cost closer to $15 billion.

Boeing also faces Wall Street concerns over its ability to reach its target of lifting output to 10 planes a month by 2013.

"Boeing still has to achieve a smooth production ramp-up and still has to do rework on some 40 airplanes that it says will take years to complete," aerospace analyst Scott Hamilton said.

Asked how confident he was that Boeing would stick to its latest output goals, ANA's Fujiki said: "We are quite confident in Boeing's ability to deliver on schedule this time."

Also uncertain is how many planes Boeing must sell to break even, something the company is not yet saying.

"If it is 1,200, they should make money; if it is larger than that it could be challenging," Hamilton said.

The delivery comes as Boeing remains locked in a dispute with one of its top labor unions in Washington state, where it has traditionally built its aircraft.

The International Association of Machinists and the National Labor Relations Board accuse Boeing of building a non-union 787 plant in South Carolina to punish the IAM for past strikes.

Boeing denies that claim, saying the jobs in South Carolina represent new employment, not the relocation of existing work. The issue has become a political lightning rod, with Republicans denouncing the Democratically controlled NLRB as being unfriendly to U.S. companies.

Remains of satellite may never be found, NASA says

CAPE CANAVERAL, Florida | Sun Sep 25, 2011 9:38am EDT

- A six-ton NASA science satellite crashed to Earth on Saturday, leaving a mystery about where a ton of space debris may have landed.

The U.S. space agency said it believes the debris ended up in the Pacific Ocean, but the precise time of the bus-sized satellite's re-entry and the location of its debris field have not been determined.

The Upper Atmosphere Research Satellite, or UARS, ended 20 years in orbit with a suicidal plunge into the atmosphere sometime between 11:23 p.m. on Friday and 1:09 a.m. EDT on Saturday (0323 to 0509 GMT Saturday), NASA said.

The satellite would have been torn apart during the fiery re-entry, but about 26 pieces, the largest of which was estimated to have weighed 330 pounds (150 kg), likely survived the fall, officials said.

As it fell to Earth, UARS passed from the east coast of Africa over the Indian Ocean, then the Pacific Ocean, across northern Canada and the northern Atlantic Ocean to a point over West Africa. Most of the transit was over water, with some flight over northern Canada and West Africa, NASA said.

"Because we don't know where the re-entry point actually was, we don't know where the debris field might be," said Nicholas Johnson, chief orbital debris scientist at NASA's Johnson Space Center in Houston. "We may never know."

Stretching 35 feet long and 15 feet in diameter, UARS was among the largest spacecraft to plummet uncontrollably through the atmosphere, although it is a slim cousin to NASA's 75-tonne (68,000 kilogram) Skylab station, which crashed to Earth in 1979.

Russia's last space station, the 135-tonne (122,000 kilogram) Mir, crashed into the Pacific Ocean in 2001, but it was a guided descent.

NASA now plans for the controlled re-entry of large spacecraft, but it did not when UARS was designed.

The 13,000-pound (5,897 kg) satellite was dispatched into orbit by a space shuttle crew in 1991 to study ozone and other chemicals in Earth's atmosphere.

It completed its mission in 2005 and has been slowly losing altitude ever since.

With most of the planet covered in water and vast uninhabited deserts and other land directly beneath the satellite's flight path, the chance that someone would be hit by falling debris was 1-in-3,200, NASA said.

"The risk to public safety is very remote," it said.

The satellite flew over most of the planet, traveling between 57 degrees north and 57 degrees south of the equator.

UARS was one of about 20,000 pieces of space debris in orbit around Earth. Something the size of UARS falls back into the atmosphere about once a year.